Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported pretax net income of $693 for each loan they originated in the second quarter of 2024, up from the reported loss of $645 per loan in the first quarter of 2024, according to the Mortgage Bankers Association’s (MBA) new Quarterly Mortgage Bankers Performance Report.
“Net manufacturing income was positive in the second quarter of 2024 – a welcome sign after eight consecutive quarters of net manufacturing losses,” said Marina Walsh, vice president of industry analysis at MBA.
“Thanks to an increase in quarterly volume, productivity and faster processing of applications, production costs decreased by approximately $1,800 per loan,” she adds. “These developments contributed to improved net results, even though production revenues decreased compared to the previous quarter.”
Other important findings include:
- Taking into account all business areas (production and service), 78% of the companies included in the report achieved a net financial profit before tax in the second quarter of 2024, compared to 59% in the first quarter of 2024.
- The average pretax production gain was 17 basis points in the second quarter of 2024, compared to an average net production loss of 25 basis points in the first quarter of 2024 and a loss of 18 basis points a year ago. The average quarterly pretax production gain from the third quarter of 2008 to the most recent quarter is 42 basis points.
- Average production volume was $492 million per company in the second quarter, compared to $384 million per company in the first quarter. Volume per company averaged 1,503 loans in the second quarter, compared to 1,193 loans in the first quarter.
- Total production revenues (royalty income, net secondary marketing revenues and inventory spread) decreased to 347 basis points in the second quarter compared to 371 basis points in the first quarter. Average production revenues from the third quarter of 2008 through the most recent quarter are 347 basis points. On a per loan basis, production revenues decreased to $11,499 per loan in the second quarter compared to $11,947 per loan in the first quarter.
- The purchase share of total originations was 86% (by dollar volume). For the entire mortgage industry, MBA estimates that the purchase share was 78% in the second quarter of 2024.
- The average loan balance for first mortgages increased to $356,993 in the second quarter (from $345,761 in the first quarter).
- Total loan production costs – commissions, allowances, occupancy, equipment and other production costs, and corporate allocations – decreased from 395 basis points in the first quarter of 2024 to 330 basis points in the second quarter of 2024. Cost per loan decreased to $10,806 per loan in the second quarter, compared to $12,593 per loan in the first quarter of 2024. From the second quarter of 2008 through last quarter, the average loan production cost was $7,524 per loan.
- Net financial income from servicing in the second quarter (unannualized) was $69 per loan, down from $82 per loan in the first quarter. Operating income from servicing, which excludes MSR amortization, gains/losses on valuation of servicing rights net of hedging gains/losses and gains/losses on bulk sales of MSRs, was $88 per loan in the second quarter, down from $93 per loan in the first quarter.
